Man City’s Losses and Financial Fair Play

Posted on January 13th, 2012 in Football, Published Writing

My latest piece in football’s business-to-business magazine, FC Business looks at manchester City’s record losses, UEFA’s Financial Fair Play initiative and why the system they’ve brought in must be the start of a process, not the end of it.

What wasn’t said about Manchester City running up English football’s largest ever annual loss was perhaps as instructive as a window into the modern game than what was. It wasn’t said that the £197m would cover the equivalent of the Premier League’s contribution to the Football Foundation for the next 16 years. Nor was it said that it was over £30m more than the combined spending of 5 other teams in the Premier League the year before, nor that it was more than the entire TV deal for the Football League for the next three years.

It has been said that City will provide UEFA with their major challenge with their Financial Fair Play system. Clubs must bring their losses over the years between now and the introduction of FFP in 2013-14 to within the limit allowed by UEFA (a figure which will reduce to zero over time). Opinion has been divided as to whether they will; Swiss Ramble blogger and accountant Kieran O’Connor sees grounds for optimism with City having lots of factors moving in the right direction, whilst FC Business writer Nick Harris is more sceptical, feeling that City sit on a knife edge. With City’s exit from the Champions League seriously denting their likely losses this year, their uphill task just got much steeper.

It raises the issue of what UEFA are trying to achieve though; after all, isn’t it his money? Leaving aside that with the UAE not being a democracy that’s a moot point, the argument runs that as Sheikh Mansour isn’t lending the money, the club aren’t enjoying success today and depriving more worthy clubs of honours by spending money they don’t actually have.

But this isn’t really about stopping clubs becoming indebted because its bad for them but because UEFA believe it is bad for the sport. They aim to create conditions where clubs spend what they have and, crucially, don’t inflate the market, even though they have the means to. They’re looking at this as a systemic problem, and the fact that some billionaires might be aggrieved at not being able to spend money isn’t their motivating concern. They’ve said that they don’t want football to become a game in which clubs compete to bag the wealthiest members of the global uber-wealthy.

But the critics make a good point when they talk about a consequence of FFP being a closed shop for the already big. If you’re only able to spend what you earn, then clubs with bigger stadia and bigger fanbases will have better players. They will bring more success and more money, which will enable they to have better players and more success and so on. To break into the clique is hard, and its taken the wealth of Abramovich and Mansour to crack what was becoming a duopoly of Arsenal and Manchester United in the early 2000s. That, critics say, explains why the biggest clubs with most to lose actually support FFP because it pulls up the drawbridge behind them. To try and catch up, clubs must stretch their earnings, which means fans will literally and figuratively pay a high price for their clubs to be successful.

But there’s a simple reform which solves the problem for no extra money and which would work wonderfully well with FFP. If the reason you need a benefactor is to catch up, then why not redistribute from those clubs who we need to catch up to? If clubs – across Europe – shared their Champions League and domestic income more effectively, in a game where top-end revenues were restrained, then the potential recruiting pool for talent would grow. You could add that by insisting on gate-sharing, with a proportion going to visitors; after all, it takes two teams to put a match on. Most competitive sports have a mechanism to promote competitive balance; in some sports, its a draft system to give weaker teams better players. In football, it’s been financial redistribution – or solidarity payments as they’re often called. Indeed, we had gate-sharing for league matches until 1985, abandoned because it worked brilliantly, to the annoyance of big clubs who threatened to break away. They’re the ultimate expression that for a league to really work, everyone needs to act in league.

And, whilst they need to take this second step to create this greater solidarity, UEFA have already done a service by acting to preserve the sense that football is a sport, not a plaything for rich men and a PR tool for richer countries. FFP might not deliver on everything its proponents want but right now, we can say they deserve credit for trying. They’ve changed the political and financial weather in the game, something we’d almost forgotten was even possible for governing bodies to do.

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